Building Your Business Credit

If you are a business owner, it is more important than ever to build a strong business credit record separate from your personal credit record. Like most individuals, most businesses in the U.S. have a credit record on file at one, two or all three of the major business credit bureaus – Experian, D&B and Equifax. The strength of that credit record plays a large role in your company’s ability to obtain credit in the form of loans, credit lines or trade credit from suppliers. The interest rates and terms that accompany those programs are largely driven by the strength of your business credit history.

Here are some ways to build your business credit record into an asset that helps your business to grow in good times and sustain during the dips.

Ensure your company is recognized as a legitimate business entity. These will steps will help to establish a business credit record if one doesn’t already exist.

  • Incorporate or form a Limited Liability Company (LLC)
  • Obtain a federal Employer Identification Number (EIN)
  • Open a bank account in your legal business name
  • Establish a listed phone number in your business name

Establish new credit. The more good credit history on your credit report, the better.

  • Work with your vendors and suppliers to establish trade financing and ask them to report your payments to all three major business credit bureaus
  • Open a business credit card from a company that reports to the credit bureaus.
  • Take out a business loan or line of credit from your bank.

Pay your bills promptly. This should go without saying. Just as late payments negatively impact your personal credit, late payments will likewise affect your business credit record.

Get a copy of your business credit report. Check the report for errors or omissions. If you have credit relationships that do not appear on the report, as your lenders or suppliers to report your payment history. You can order your Experian business credit report through BCR for $34.95. A year of free business credit monitoring is included. Search for your business credit report for FREE here.

Correct any errors in your business credit report. If you discover any errors in your credit report, visit the My Company Report page on BusinessCreditReports.com for instructions on how to contact Experian, D&B and Equifax to correct your credit report.

Having a strong business credit record will enable your company to obtain better interest rates and credit terms from banks and other lenders and more favorable terms from your vendors and suppliers. Not only will your business cash flow better, it will be positioned to take advantage of greater financing opportunities when it’s time to expand.